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 How are you doing on these IPS questions? 
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Joined: 01 Mar 2013
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Overall, I have been ok I guess. Usually in range of 65 - 75% but sometimes I completely miss the boat and put above av. risk when they are below and I almost always miss one little part of the return section and thus calculate the wrong return.


26 Jun 2015
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Joined: 01 Mar 2013
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I wish the entire exam was on IPS formation.


26 Jun 2015
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Joined: 01 Mar 2013
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Galli wrote:
I wish the entire exam was on IPS formation.
You and me both, bud.


26 Jun 2015
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Galli wrote:
I wish the entire exam was on IPS formation.
I agree. I don’t necassary think there terribly difficult I’m just trying to get consistently 80 to 90% and above on these since they are so heavily weighted with a 0 standard deviation in terms of if it is going to be on the exam or not. How do you attack these?


26 Jun 2015
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Joined: 01 Mar 2013
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What’s with the humble brags? The guy asked for help.
I found the best source is working through the mechanics of old AM exams’ guideline answers. Do them all if you’re serious about getting those points. IPS from 10+ years ago are still very relevant.


26 Jun 2015
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Joined: 01 Mar 2013
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The question states that they are going to pay off the debt as soon as they recieve the inheritance so you are evaluating their risk tolerance (note Tolerance which is ablility and willingness is asked) in light of their portfolio after they pay off the debt.


26 Jun 2015
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Joined: 01 Mar 2013
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Ahh I see. Thank you. I actually included that in my IB calculation but just didn’t think about it for risk section. The more I do these the more I realize IPS q’s are a test of attention to detail skills.


26 Jun 2015
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And as a follow up. Why the heck is a % return on say an equity portoflio included in cash flows and not just an addition to the investment base? I mean if I own $1,000,000 worth of stock XYZ and stock XYZ appreciates 10% during the year, at retirement in one year isn’t my investment base $1,100,000? And not $1,000,000 then the $100,000 is part of the cash flow part of IBS. So confused by that.


26 Jun 2015
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Required return ideally should be calculated from this year portfolio, hence you are not needed to consider the growth in equity portfolio.
Also just think in line of required Vs Actual return, required can be just 6 % return, where as current portfolio may be yielding 10 %.


26 Jun 2015
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jitendra179 wrote:
Required return ideally should be calculated from this year portfolio, hence you are not needed to consider the growth in equity portfolio.
Also just think in line of required Vs Actual return, required can be just 6 % return, where as current portfolio may be yielding 10 %.
Ok thanks, that makes sense , but why would the expected equity return be included as a cash inflow when calculating the need? Sorry Ill get you the CFA mock Im talking about when I get home today.


26 Jun 2015
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